Sonder, a short-term rentals company, announced on Monday that it intends to file for bankruptcy, following Marriott International’s announcement that their licensing agreement had come to an end. The deal, established in August 2024, had allowed Sonder properties to be booked through Marriott’s Bonvoy website, providing essential support to the struggling San Francisco-based company that faced significant financial challenges during the Covid-19 pandemic and after its SPAC merger in 2022.
In a statement issued on Sunday, Marriott cited Sonder’s “default” as the reason for terminating the 20-year agreement, stating that it was “no longer in effect.” This development has forced Sonder to reassess its options, and in its response on Monday, the company revealed that despite making extensive efforts to stabilize its finances since Marriott’s announcement, it could not find a viable solution.
Sonder’s Board of Directors has made the difficult choice to wind down operations and pursue a court-supervised liquidation of its U.S. business. In her statement, Janice Sears, Sonder’s interim CEO, highlighted that technical integration issues with Marriott’s Bonvoy platform led to unforeseen costs and a significant drop in revenue. “We are devastated to reach a point where a liquidation is the only viable path forward,” she expressed.
Once valued at $1.9 billion during its initial public offering, Sonder also plans to initiate insolvency proceedings in other countries. While this news carries weight for the industry, it also underscores the precarious nature of the market for short-term rentals, especially in today’s economic climate. As the situation unfolds, there may be lessons to be learned regarding business partnerships and the need for sustainable practices, which could deliver hope for a more resilient future in the hospitality sector.